2016 Food and beverage industry update, part 1

New tastes, trends and transformations

INSIGHT ARTICLE
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April 22, 2016

It’s no secret that today’s food and beverage customer expects variety—and this doesn’t just apply to their plate, though recent research from the National Restaurant Association reveals that 66 percent of consumers eat a larger variety of cuisines than they did five years ago.1 Rather, this appetite for change is due in large part to an ever-growing network of mobile, digital and social tools designed to make the grocery shopping process more dynamic, engaging and informative than ever before.

While technology is permeating every step of the food and beverage supply chain, executives are simultaneously balancing other initiatives sure to shape operational and forward-facing strategies. Pressure to maintain strict food safety records and comply with detailed regulations as the Food Safety Modernization Act (FSMA) rolls out, as well as tightening margins and shifting commodity pricing all play important roles in determining exactly how, where and when industry leaders will apply innovation and change.

Clear and concise: Meeting customer and regulatory demand for traceability

One area where food and beverage companies are already beginning to transform is by improving customer communications, ensuring all areas of production, such as manufacturing, processing, packaging and labeling, are transparent. While organic and natural products have long appealed to customers seeking “greener” options, the desire to learn more about where their food is coming from and what’s in it has now expanded to include a wider shopper base.

In fact, a study by GNT Group, the leading global provider of food coloring concentrates, found that two-thirds of shoppers now check the labels of food and beverage packages before purchasing, with a majority seeking to ensure against artificial additives or preservatives and that the product is comprised of ingredients that are easy to read and understand.2

To this end, companies such as General Mills, Nestle and Kraft, all made brand announcements in 2015 that detail plans to remove certain artificial colorants, preservatives and flavors from their products. While such actions might only be the tip of the iceberg, they’re setting the stage for a major shift toward customer-led food and beverage programming designed specifically with the customer in mind, and set to a pace capable of keeping up with their increasing demands for an honest and reliable brand relationship.

From manual to mechanical: The benefits of food and beverage automation

In a similar vein, companies are also laying the procedural groundwork to establish more streamlined and consistent food safety regulations in response to FSMA and Hazard Analysis Critical Control Point(HACCP) standards for food safety and security. To this end, they’re investing in automation technology designed to eliminate certain manual processes in favor of machine-led systems that work faster, smarter and more accurately than a human workforce.

According to an analysis by leading market researcher Technavio, the industrial automation market in the food and beverage industry is expected to grow at a Compound Annual Growth Rate (CAGR) of 9.51 percent between 2014 and 2019, and the ARC Advisory Group predicts automation expenditures in the food and beverage industry will reach $7 billion by 2016.3 4

Though specific applications vary, overlying themes are discovered. In a recent Food Processing Magazine survey, seven in 10 respondents plan to automate portions of production or their entire line; 54 percent plan to automate some packaging areas, or even their entire secondary packaging systems; and one-quarter plan to invest in automating maintenance and repair functions.5

Setting the stage: Growth and gains now and in the future

As they attempt to manage expanding customer expectations and regulatory requirements, food and beverage leaders are faced with the task of periodically examining current processes, researching new opportunities and planning where to best apply their dollars, time and manpower. Be sure to read Part 2 of this article, where we discuss more ways they’re looking embrace change, how such strategies play into their overall aim to keep customers happy—and hungry for more.

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